Industrial output shrinks 0.21%, but decline slowing

TURNAROUND?Analysts said the slowing pace of output declines suggest that the economy is bottoming out, but they forecast only a modest rebound for later this year

By George Liao / Staff reporter

The industrial output index decreased 0.21 percent to 135.69 points last month from the same period last year, following a 1.78 percent fall in April and a 3.43 percent decrease in March, the Ministry of Economic Affairs said yesterday.

The country’s industrial output has declined year-on-year for every month since November last year, with the exception of February, after the Lunar New Year holiday, according to the ministry’s data.

The latest data indicated that the year-on-year decline in the country’s industrial output is diminishing and that output might be beginning to rebound, Huang Ji-shih (黃吉實), director-general of the ministry’s statistics department, said at a press conference.

On a monthly basis, last month’s index grew 3.99 percent from April’s 130.48 points, according to the ministry’s data.

The industrial output data came after the ministry said on Wednesday that export orders — an indication of shipments in the next one to three months — fell 3.04 percent last month from a year earlier, marking continuing year-on-year declines since December last year, except during February, after the Lunar New Year.

“Importantly, today’s production data — which indicate that the pace of declines in production output year-on-year is slowing — along with yesterday’s data indicating a continuing increase in hiring, suggests that local producers’ confidence has remained resilient, despite weak exports,” Taipei-based Standard Chartered Bank economist Tony Phoo (符銘財) said.

“It also serves as another sign — along with the leading indicators index — that the economy may be nearing the trough of the current down cycle, though the rebound in the second half is likely to be modest,” Phoo said.

Manufacturing sector production — which accounts for more than 90 percent of the nation’s total factory output and includes the electronics, chemical, machinery, foodstuff and textile industries — fell 0.37 percent year-on-year last month.

The decline was primarily caused by output contraction in the sectors of machinery equipment, computers, electronics and optical products, Huang said.

Output of machinery equipment fell 13.92 percent last month from the year before, while output of computers, electronics and optical products decreased 12.65 percent from the same period last year, the data showed.

Output of the electronic components sector grew 1.67 percent last month from a year ago, on the back of strong global demand for mobile devices, which benefited semiconductor and panel manufacturers, Huang said.

For this month, Huang predicted a slight increase in manufacturing output over last month, based on a sentiment survey among manufacturers.

He said manufacturing output was likely to increase 1.19 percent year-on-year to 136.09 points.